DCIT, Panchkula V. M/s Haryana State Agriculatural Marketing Board, Panchkula

ITA 1014/CHANDI/2009

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4941 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 30-10-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR GULSHAN RAJ
• Assessee Lawyers: HARISH NAYYAR
• Keywords: Depreciation; Charitable institution; Question of law; Procedural lapse; Benefit of exemption
• Section: 143(3); 260A; 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCHA, CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.577/CHD/2008 ASSESSMENT YEAR: 2004-05 THE ASST. CIT VS. M/S HARYANA STATE AGRICULTURA L PANCHKULA CIRCLE, MARKETING BOARD, SECTOR-6 PANCHKULA PANCHKULA PAN NO. AAALH0016R ITA NO.1014/CHD/2009 ASSESSMENT YEAR: 2006-07 THE DCIT VS. M/S HARYANA STATE AGRICULTURAL PANCHKULA CIRCLE, MARKETING BOARD, SECTOR-6 PANCHKULA PANCHKULA ITA NO.538/CHD/2010 ASSESSMENT YEAR: 2003-04 THE DCIT VS. M/S HARYANA STATE AGRICULTURAL PANCHKULA CIRCLE, MARKETING BOARD, SECTOR-6 PANCHKULA PANCHKULA ITA NO.614/CHD/2011 ASSESSMENT YEAR: 2008-09 THE DCIT VS. M/S HARYANA STATE AGRICULTURAL PANCHKULA CIRCLE, MARKETING BOARD, SECTOR-6 PANCHKULA PANCHKULA (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. HARISH NAYYAR REVENUE BY : DR. GULSHAN RAJ DATE OF HEARING : 08/03/2018 DATE OF PRONOUNCEMENT : 22/05/2018 ORDER PER BENCH: ALL THE ABOVE APPEALS HAVE BEEN FILED BY THE REVENU E AGAINST THE SEPARATE ORDERS OF LD. CIT(A), PANCHKULA. 2 2. THE YEAR WISE GROUNDS OF THE APPEALS ARE READ AS UNDER: I. GROUND RAISED BY THE REVENUE IN ITA 538/CHD/2010 F OR A.Y. 2003-04 IS AS UNDER: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HONBLE ITAT HAS ERRED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE DID NOT MAINTAIN BOOKS OF ACCOUNTS AS STIPULATED AND THUS THE ASSESSEE HAS NO T SATISFIED THE REQUIRED CONDITIONS FOR EXEMPTION, II. GROUND RAISED BY THE REVENUE IN ITA 1014/CHD/2010 FOR A.Y. 2006-07 IS AS UNDER: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE DID NOT MAINTAIN PROPER BOOKS OF ACCOUNT WHICH IS A PRE-REQUISITE FOR THE GRANT OF E XEMPTION UNDER SECTION 11 ? III. GROUND RAISED BY THE REVENUE IN ITA 614/CHD/2010 F OR A.Y. 2008-09 IS AS UNDER: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS RIGHT IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPT ION UNDER SECTION 11 WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE DID NOT MAI NTAIN PROPER BOOKS OF ACCOUNT AS STIPULATED AND THUS THE ASSESSEE HAS NO T SATISFIED THE REQUIRED CONDITIONS FOR EXEMPTION ? 3. SINCE THE ISSUE IN ALL THE THREE YEARS IS IDENTI CAL THEREFORE THEY ARE BEING DECIDED TOGETHER BY WAY OF THIS COMMON ORDER. 4. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE F ILED RETURN OF INCOME DECLARING TAXABLE INCOME NIL ON 11.11.2004. THE ASS ESSING OFFICER NOTICED THAT THE AUDITOR IN FORM NO.3BC HAS STATED THAT IN THE A BSENCE OF PROFIT & LOSS ACCOUNTS, INCOME & EXPENDITURE ACCOUNT IS NOT VERIF IABLE. THE AUDITORS REPORTED THAT THE BOOKS OF ACCOUNTS OF VARIOUS OTHER OFFICES HAVE NOT BEEN EXAMINED. IT IS STATED IN THE AUDIT REPORT THAT THE BOOKS OF ACCOUNTS OF ONLY THE HEAD OFFICE WERE EXAMINED AND NO BOOKS OF ACCOUNTS OF BRANCH OF FICES WERE PRODUCED. 5. DURING THE ASSESSMENT PROCEEDINGS , ASSESSEE CONTESTED THAT HE HAS BEEN GRANTED REGISTRATION U/S 12AA, THEREFORE, HIS INCOM E IS EXEMPT. THIS PLEA OF THE ASSESSEE HAS BEEN EXAMINED BY THE ASSESSING OFFICER WHO HELD THAT FOR CLAIMING EXEMPTIONS U/S 11 & 12, THE ASSESSEE SHOULD MAINTAI N COMPLETE BOOKS OF ACCOUNTS AND THESE SHOULD BE PROPERLY AUDITED. THE ASSESSING OFFICER HELD THAT THE ASSESSEE'S BOOKS OF ACCOUNTS ARE NOT MAINTAINED AND THE ACCOUNTS MAINTAINED UNDER THE INCOME TAX ACT ARE NOT TRUE A ND VERIFIABLE AND AS PER THE 3 OBSERVATIONS OF THE AUDITOR. THEREFORE, THE ASSESSMENT WAS COMPLET ED IN THE MANNER OF AOP AND NOT IN THE STATUS OF CHARITABLE I NSTITUTION. 6. THE MATTER TRAVELLED UP TO THE HONBLE HIGH COUR T VIDE JUDGMENT DT. 20/02/2017, THE HONBLE HIGH COURT HAS HELD AS UNDE R: 1. THIS ORDER SHALL DISPOSE OF ITA NOS. 126, 568 OF 2009, 588 OF 2010, 110 OF 2011, 40 OF 2012 AND 323 OF 2015 AS ISSUE INVOLVED IN ALL TH ESE APPEALS IS IDENTICAL. HOWEVER, THE FACTS ARE BEING EXTRACTED FROM ITA NO. 126 OF 2009. 2. ITA NO. 126 OF 2009 HAS BEEN PREFERRED BY THE AP PELLANT- REVENUE UNDER SECTION 260A OF THE INCOME TAX ACT, 1961 WHICH (IN SHORT, THE ACT) AGAINST THE ORDER DATED 19.08.2008, ANNEXURE A.3, PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH (A), CHANDIGARH (IN SHOR T, THE TRIBUNAL) IN ITA NO. 577/CHANDI/2008 FOR THE ASSESSMENT YEAR 2004-05. ON 10.02.2010, THIS APPEAL WAS ADMITTED TO CONSIDER THE FOLLOWING SUBSTANTIAL QUESTION OF LAW. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNE D ITAT HAS ERRED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER S ECTION 11 WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE DID NOT MAINTAIN BOOKS O F ACCOUNT AS STIPULATED UNDER THE INCOME TAX ACT, 1961 WHICH WAS STATED BY THE AU DITOR ITSELF AND THE ASSESSEE THEREFORE NOT SATISFYING THE NECESSARY CONDITIONS? 3. IN ITA NO. 588 OF 2010, ADDITIONAL SUBSTANTIAL Q UESTION OF LAW RAISED BY THE APPELLANT-REVENUE READS THUS:- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LEARNED ITAT IS JUSTIFIED IN ALLOWING THE EXEMPTION UNDER SECTIONS 11 AND 12 TO THE ASSESSEE WITHOUT CONSIDERING THE MERITS OF THE CASE FOR THE YEAR UND ER CONSIDERATION ESPECIALLY WHEN THE FACTS OF THE CASE FOR THE YEAR UNDER CONSI DERATION ARE NOT IDENTICAL TO THOSE OF THE EARLIER YEARS, MERELY BY RELYING ON IT S EARLIER ORDER? 4. A FEW FACTS RELEVANT FOR THE DECISION OF THE CON TROVERSY INVOLVED AS NARRATED IN ITA NO. 126 OF 2006 MAY BE NOTICED. THE RESPONDENT- ASSESSEE M/S HARYANA STATE AGRICULTURAL MARKETING BOARD, PANCHKULA FILED ITS R ETURN OF INCOME FOR THE ASSESSMENT YEAR 2004-05 ON 11.11.2004 DECLARING INC OME AT NIL. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 22.12.2006, A NNEXURE A.1 BY THE ASSESSING OFFICER AT TOTAL TAXABLE INCOME OF ` 11,0 3,11,164/-. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE COMM ISSIONER OF INCOME TAX (APPEALS) [CIT(A)]. VIDE ORDER DATED 17.03.2008, AN NEXURE A.2, THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. IT WAS HELD THA T THE ASSESSEE BEING A STATUTORY BODY CANNOT FUNCTION BEYOND THE STATUTORY PROVISIONS UNDER WHICH IT HAS BEEN CREATED. NON PRODUCTION OF SANCTION LETTERS DU E TO PAUCITY OF TIME, MAY BE PROCEDURAL IRREGULARITY BUT IT SHALL NOT AFFECT THE TAXABILITY OF INCOME SO LONG AS EXPENDITURE HAS BEEN INCURRED TOWARDS THE OBJECT OF THE BOARD. IT WAS CONCLUDED THAT THE ASSESSING OFFICER WAS NOT JUSTIF IED IN DENYING EXEMPTION IN RESPECT OF THE SURPLUS THAT HAD BEEN BROUGHT TO TAX . NOT SATISFIED WITH THE ORDER, THE REVENUE FILED AN APPEAL BEFORE THE TRIBUNAL. VI DE ORDER DATED 19.08.2008, ANNEXURE A.3, THE TRIBUNAL UPHELD THE ORDER PASSED BY THE CIT(A) AND DISMISSED THE APPEAL OF THE REVENUE. IT HAS BEEN RECORDED BY THE TRIBUNAL THAT EVEN WHILE GRANTING REGISTRATION UNDER SECTION 12A OF THE ACT, THE ASSESSEE WAS FOUND TO BE MAINTAINING ACCOUNTS WHICH WERE DULY AUDITED. THE A SSESSEE WAS ALSO FOUND HAVING COMPLIED WITH THE REQUIREMENT OF LAW IN GETT ING ITS ACCOUNT AUDITED. THERE IS FINDING BY THE CIT(A) THAT THE AUDITORS HA D CERTIFIED IN THE AUDIT REPORT AND THEY HAD EXAMINED THE BOOKS OF ACCOUNT AND TRIA L BALANCES OF VARIOUS OFFICES. THIS FACTUAL POSITION WAS NOT CONTROVERTED BY THE REVENUE. THUS, THE TRIBUNAL DID NOT FIND ANY INFIRMITY IN THE ORDER PA SSED BY THE CIT(A). HENCE, THE INSTANT APPEALS BY THE REVENUE. 5. WE HAVE HEARD LEARNED COUNSEL FOR THE PARTIES. 6. ON APRIL 11, 2014, LEARNED COUNSEL FOR THE RESPO NDENT-ASSESSEE STATED THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE BEING MAINTAI NED AND IN THE AUDIT REPORTS, IT WAS MENTIONED WITH REGARD TO THE PREPAR ATION OF PROFIT AND LOSS 4 ACCOUNT AND BALANCE-SHEET. LEARNED COUNSEL PRAYED F OR TIME TO PRODUCE THE AUDIT REPORTS. ON 11.02.2016, LEARNED COUNSEL FOR T HE RESPONDENT-ASSESSEE PRAYED FOR FURTHER TIME TO PRODUCE RELEVANT MATERIAL TO SU BSTANTIATE THAT THE RECORD WAS MAINTAINED IN WHICH THE VARIOUS INCOMES AND EXPENDI TURE COULD BE EASILY VERIFIED. ON 24.01.2017, LEARNED COUNSEL FOR THE AS SESSEE AGAIN PRAYED FOR TIME TO FILE AN APPLICATION PLACING CERTAIN DOCUMENTS ON RE CORD. THE NEEDFUL WAS NOT DONE. 7. A PERUSAL OF THE ORDER PASSED BY THE TRIBUNAL DA TED 19.08.2008, ANNEXURE A.3 SHOWS THAT WHILE COMPLETING THE ASSESSMENT, THE ASS ESSING OFFICER DENIED THE BENEFIT OF EXEMPTION UNDER SECTIONS 11AND 12 OF THE ACT ON THE GROUND THAT THE ACCOUNTS OF THE ASSESSEE WERE NOT CORRECT AND NO SE PARATE BOOKS OF ACCOUNT HAD BEEN MAINTAINED AS REQUIRED UNDER THE ACT. THE ASSESSMENT WAS COMPLETED NOT IN THE STATUS OF CHARITABLE INSTITUTION. THUS, THE EXEMPTION WAS NOT ALLOWED. THE MATTER WENT TO THE TRIBUNAL AND IT WAS SENT BACK TO THE ASSESSING OFFICER. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT. THE CIT (A) SOUGHT REMAND REPORT FROM THE ASSESSING OFFICER. THE ASSESSEE CLAIMED TH AT THE BOOKS OF ACCOUNT WERE REGULARLY MAINTAINED. ACCORDINGLY, THE ASSESSING OF FICER WAS ASKED TO EXAMINE THE MATTER VIDE LETTER DATED 23.07.2007. WHILE GRAN TING REGISTRATION UNDER SECTION 12A OF THE ACT, THE ASSESSEE WAS FOUND TO BE MAINTA INING ACCOUNTS WHICH WERE DULY AUDITED. IT WAS FURTHER RECORDED BY THE CIT(A) THAT THE AUDITORS HAD CERTIFIED IN THE AUDIT REPORT THAT THEY HAD EXAMINED BOOKS OF ACCOUNT AND TRIAL BALANCE OF VARIOUS OFFICES. IN VIEW OF THIS FINDING THE TRIBUN AL DID NOT FIND INFIRMITY IN THE ORDER PASSED BY THE CIT(A). THE RELEVANT FINDINGS RECORDE D BY THE TRIBUNAL READ THUS:- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL ON FILE. BRIEF FACTS ARE THAT THE ASSESSEE IS A STATUTORY BODY, SE T UP UNDER HARYANA STATE AGRICULTURAL MARKET BOARD, FOR THE WELFARE OF THE F ARMING COMMUNITY AT LARGE AND IS A CHARITABLE ORGANIZATION CARRYING ON THE CHARIT ABLE ACTIVITIES AS DEFINED IN SEC- 2(15) OF THE ACT. AS FAR AS, REGISTRATION IS CONCER NED, THE ISSUE WAS SETTLED AND THE ASSESSEE WAS GRANTED REGISTRATION. WHILE COMPLETING THE ASSESSMENT THE LEARNED ASSESSING OFFICER DENIED THE BENEFIT OF EXEMPTION U NDER SECTION 11 AND 13 ON THE GROUND THAT ACCOUNTS OF THE ASSESSEE ARE NOT CORREC T AND NO SEPARATE BOOKS OF ACCOUNT HAVE BEEN MAINTAINED AS REQUIRED UNDER THE ACT, CONSEQUENTLY THE ASSESSMENT WAS COMPLETED AS AOP AND NOT IN THE STAT US OF CHARITABLE INSTITUTION. THEREFORE, EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTION 11(1) WAS NOT ALLOWED. THE MATTER EVEN TRAVELLED TO THE TRIBUNAL AND IT WAS SET ASIDE TO THE LEARNED ASSESSING OFFICER. IN THE SET ASIDE PROCEED INGS AND PURSUANCE TO COMPLIANCE OF THE ORDER OF THE TRIBUNAL, THE LEARNE D ASSESSING OFFICER COMPLETED THE ASSESSMENT. DURING FIRST APPELLATE STAGE, LEARN ED CIT(A) AGAIN SOUGHT THE REMAND REPORT FROM THE ASSESSING OFFICER AND THE SA ME WAS DULY CONSIDERED. THE REMAND REPORT DATED 24.12.2007 IS IN THE PAPER BOOK AVAILABLE ON THE FILE. THE LEARNED CIT(A) HAS ALSO CONSIDERED THE SUBMISSIONS OF THE ASSESSEE WHICH ARE AVAILABLE AT PAGE 4 ONWARDS. EVEN WRITTEN SUBMISSIO NS FILED BY THE ASSESSEE WERE FORWARDED TO THE LEARNED ASSESSING OFFICER FOR EXAM INATION AND COMMENTS. THERE IS FINDING IN THE IMPUGNED ORDER THAT THE LEARNED A SSESSING OFFICER INSTEAD OF EXAMINING THE BOOKS OF ACCOUNT, SIMPLY REITERATED H IS OBSERVATIONS AS MADE IN THE EARLIER ASSESSMENT ORDER. IN ITS WRITTEN SUBMIS SIONS, THE ASSESSEE HAS CLAIMED THAT BOOKS OF ACCOUNT WERE REGULARLY MAINTAINED, TH EREFORE, THE LEARNED ASSESSING OFFICER WAS ASKED TO EXAMINE THE MATTER V IDE LETTER DATED 23.07.2007 ALONG WITH CERTAIN DIRECTIONS. EVEN WHILE GRANTING REGISTRATION UNDER SECTION 12A OF THE ACT, THE ASSESSEE WAS FOUND TO BE MAINTAININ G ACCOUNTS WHICH ARE DULY AUDITED. THE ASSESSEE WAS ALSO FOUND HAVING COMPLIE D WITH THE REQUIREMENT OF LAW IN GETTING ITS ACCOUNTS AUDITED. AT PAGE 16 OF THE IMPUGNED ORDER, THERE IS A FINDING THAT THE AUDITORS HAVE CERTIFIED IN THE AUD IT REPORT THAT THEY HAVE EXAMINED THE BOOKS OF ACCOUNT AND TRIAL BALANCE OF VARIOUS OFFICES. THIS FACTUAL MATRIX WAS NOT CONTROVERTED BY THE REVENUE. EVEN OT HERWISE THE ASSESSEE IS A STATUTORY BODY AND CANNOT FUNCTION BEYOND THE STATU TORY PROVISIONS UNDER WHICH IT WAS CREATED. IN VIEW OF THIS FINDING, WE HAVE NO T FOUND ANY INFIRMITY IN THE IMPUGNED ORDER OF LEARNED CIT(A), CONSEQUENTLY THE SAME IS UPHELD. 8. LEARNED COUNSEL FOR THE REVENUE VERY EMPHATICALL Y SUBMITTED THAT THE FINDING RECORDED REGARDING MAINTENANCE OF BOOKS OF ACCOUNT BY THE ASSESSEE ARE PERVERSE AND MORE SO WHEN INSPITE OF TAKING SEVERAL OPPORTUNITIES BEFORE THIS 5 COURT AS WELL, THE LEARNED COUNSEL FOR THE ASSESSEE WAS UNABLE TO SUBSTANTIATE THESE FINDINGS BY PRODUCING THE RECORD IN THE HIGH COURT. THUS, THE FINDING RECORDED BY THE TRIBUNAL IS REQUIRED TO BE VERIFIED AND SINCE THE RESPONDENT- ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THE BOOKS OF ACCOUNT AND THE AUDIT REPORT, IT IS APPROPRIATE TO SET ASIDE THE IMPUGNED ORDERS AND REMAND THE MATTER BACK TO THE TRIBUNAL FOR FRESH DECISION IN ACCORDAN CE WITH LAW AFTER HEARING BOTH THE PARTIES. AS REGARDS THE ADDITIONAL SUBSTANTIAL QUESTION OF LAW RAISED IN ITA NO. 588 OF 2010, THOUGH NO SERIOUS ERROR WAS RAISED, SI NCE THE MATTER IS BEING REMANDED, THE TRIBUNAL SHALL LOOK INTO THIS FACT AL SO. 9. AS A RESULT, ALL THE APPEALS STAND DISPOSED OF A CCORDINGLY. 7. SINCE THE MOOT ISSUE OF MAINTENANCE OF THE BOOKS OF ACCOUNTS HAS NOT BEEN EXAMINED AS THEY HAVE NOT BEEN PRODUCED BEFORE THE ASSESSING OFFICER AND AS WELL AS BEFORE THE HONBLE HIGH COURT, THE M ATTER WAS REMANDED BACK FOR DECISION AFRESH AFTER HEARING BOTH THE PARTIES IN ACCORDANCE WITH LAW. 8. DURING THE HEARING BEFORE US, THE LD. AR SUBMITT ED AS UNDER IN HIS WRITTEN REPLY: APPELLANT BOARD WHO IS FULLY OWNED BY STATE GOVT, OF HARYANA HAS BEEN SET UP UNDER THE PAPM ACT FOR THE WELFARE OF FARMERS COMMU NITY IN THE STATE OF HARYANA. THE ACCOUNTS OF THE APPELLANT BOARD ARE SU BJECT TO AUDIT BY THE ACCOUNTANT GENERAL AUDIT, HARYANA, CHANDIGARH WHICH IS BEING UNDERTAKEN REGULARLY BY ACCOUNTANT GENERAL AUDIT, HARYANA. COP IES OF AUDIT CERTIFICATES FOR THE ASSESSMENT YEARS 2003-04, 2004-05 AND 2005-06 I SSUED/GIVEN BY THE ACCOUNTANT GENERAL AUDIT, HARYANA, CHANDIGARH ARE E NCLOSED FOR YOUR KIND REFERENCE. THESE CERTIFICATES CLEARLY AFFIRM THE FA CT THAT PROPER BOOKS OF ACCOUNTS HAVE BEEN MAINTAINED BY THE APPELLANT BOARD DURING :HE YEARS UNDER APPEALS. FURTHER THE ACCOUNTS OF APPELLANT BOARD WERE ALSO A UDITED BY THE FIRM OF CHARTERED ACCOUNTANTS. COPIES OF AUDIT REPORTS WERE DULY FILED BY THE APPELLANT BOARD ALONG WITH ITS INCOME TAX RETURNS. IT MAY ALSO BE RELEVANT TO MENTION HERE THAT THE MA TTER REGARDING MAINTENANCE OF BOOKS OF ACCOUNTS OF THE APPELLANT BOARD CAME UP FOR HEARING FOR THE FIRST TIME DURING THE COURSE OF ASSESSMENT PROCEEDINGS FO R THE ASSESSMENT YEAR 2004- 05, WHEN THE BENEFIT OF EXEMPTION UNDER SECTION 11 AND 12 WAS DENIED BY THE AO BY ASSESSING THE APPELLANT BOARD AS AOP ON THE G ROUND THAT ACCOUNTS OF THE APPELLANT BOARD ARE NOT CORRECT AND NO SEPARATE BOO KS OF ACCOUNTS HAVE BEEN MAINTAINED BY THE APPELLANT BOARD. THE MATTER EVENT UALLY TRAVELLED TO HON'BLE ITAT AND WAS SET ASIDE BY HON'BLE ITAT TO AO. IN TH E SET ASIDE PROCEEDINGS, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) SOUGHT REMAND REPORT FROM THE ASSESSING OFFICER. AFTER CONSIDERING THE REMAND REPORT AND AF TER HAVING BEEN SATISFIED THAT APPELLANT BOARD IS MAINTAINING PROPER BOOKS OF ACCO UNTS, LD. CIT(A) ALLOWED THE APPEAL OF THE APPELLANT BOARD. THEREAFTER, THE MATT ER CAME TO THE HON'BLE INCOME TAX APPELLATE TRIBUNAL, WHO ALSO UPHELD THE ORDER OF CIT(A) AND HELD THAT BOOKS OF ACCOUNTS HAVE BEEN MAINTAINED BY THE APPEL LANT BOARD. THE RELEVANT FINDINGS OF THE HON'BLE INCOME TAX APPELLATE TRIBUN AL ARE CONTAINED IN PARA(S) 3 TO 5 OF ORDER IN ITA NO.577/CHANDIGARH/2008 (ENCLOS ED HEREWITH) FOR YOUR KIND CONSIDERATION AND TAKING NECESSARY ACTION IN THE MA TTER. SINCE THE APPELLANT BOARD HAS MAINTAINED PROPER BOO KS OF ACCOUNTS, THUS APPELLANT BOARD IS ELIGIBLE FOR EXEMPTION UNDER SEC TION 11 AND 12 OF THE INCOME TAX ACT 1961. IT IS THUS PRAYED THAT APPEALS OF THE INCOME TAX D EPARTMENT 6 REMANDED TO THE HON'BLE INCOME TAX APPELLATE TRIBUN AL BY THE HON'BLE PUNJAB AND HARYANA HIGH COURT MAY KINDLY BE DISMISSED. 9. AS AGAINST THE SUBMISSION OF THE LD. AR, THE DEP ARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUED THAT THE BASIS OF ADDITION WAS NO N PRODUCTION OF BOOKS OF ACCOUNTS BEFORE THE ASSESSING OFFICER WHO IS THE PR IMARY AUTHORITY TO EXAMINE THE SAME AND COME TO A REASONABLE CONCLUSION AND AL LOW OR DISALLOW THE EXEMPTION. HENCE, HE ARGUED THAT IN FITNESS OF THIN GS, IF THE BOOKS OF ACCOUNTS ARE BEING MAINTAINED BY THE ASSESSEE, THEN THE ASSE SSING OFFICER SHOULD GET AN OPPORTUNITY TO EXAMINE THE SAME. 10. HAVING HEARD THE ARGUMENTS OF BOTH THE PARTIES AND SINCE THE ASSESSEE CATEGORICALLY SUBMITS THAT BOOKS OF ACCOUNTS HAVE BEEN DULY MAINTAINED AND CAN BE PRODUCED FOR VERIFICATION ALONG WITH THE AUD IT REPORTS AND ALSO THE ARGUMENTS OF THE LD. DR THAT IF THE BOOKS ARE MAINT AINED, THEY ARE REQUIRED TO BE EXAMINED BY THE PRIMARY AUTHORITY I.E; THE ASSES SING OFFICER, WE HEREBY REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR THE LIMITED PURPOSE OF PASSING AN ORDER DENOVO WITH REGARD TO THIS GROUND ONLY AND WITH DIRECTIONS TO THE ASSESSEE TO PRODUCE BOOKS OF ACCO UNTS PROMPTLY BEFORE THE ASSESSING OFFICER. 11. THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 12. THE GROUND NO. 2 OF THE REVENUE APPEAL FOR THE A.Y. 2008-09 IS AS UNDER: 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE DEPRECIATION OF RS. 89,04,073/- BY WAY OF DISALLOWANCE OF DEPRECIATION MADE BY THE ASSESSING OFFICER? 13. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER HAS DISALLOWED AN AMOUNT OF RS. 89,04,073/- ON ACCOUNT OF DEPRECIATIO N CLAIMED BY THE ASSESSEE IN THE INCOME AND EXPENDITURE STATEMENT. THE ASSESS ING OFFICER HELD THAT A CHARITABLE INSTITUTION REGISTERED UNDER SECTION 12A A OF THE INCOME TAX ACT,1961 CAN CLAIM THE ENTIRE COST OF FIXED ASSET PURCHASED AS APPLICATION OF INCOME IN THE YEAR OF PURCHASE. HENCE, HE OPINED THAT THE SUB SEQUENT CLAIM OF DEPRECIATION ON THE SAME ASSETS CANNOT BE ALLOWED. 14. WE FIND THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION AS IT HAS BEEN HELD IN VARIOUS CASES BASED ON THE JUDICIAL PRONOUN CEMENTS THAT DEPRECIATION TO A CHARITABLE INSTITUTION REGISTERED UNDER SECTIO N 12AA OF THE ACT IS AN 7 ALLOWABLE EXPENDITURE. SINCE, THE DECISION OF THE L D. CIT(A) IS BASED ON THE JUDGMENT PASSED BY THE COORDINATE BENCH OF ITAT CHA NDIGARH IN THE CASE OF HARYANA LABOUR WELFARE BOARD VS. CIT IN ITA NO. 89 4/CHD/2009 AND ALSO BASED ON THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN TH E CASE OF MARKET COMMITTEE, PIPLI 45 DTR 381, WE DECLINE TO INTERFERE IN THE OR DER OF THE LD. CIT(A). 15. THE APPEAL OF THE REVENUE ON THIS GROUND STANDS DISMISSED. 16. AS A RESULT, APPEALS OF THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (DR. B.R.R.KU MAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 22/05/2018 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR